BIR Ruling No. 518-11

December 22, 2011 BIR RULING NO. 518-11 Tax Code, Sections 27 (D) (1), 235; BIR Ruling No. 115-10; BIR Ruling No. 141-10 Rizal Commercial Banking Corporation Ilustre Business Center Cor. San Pedro and Ilustre Streets Davao City Attention: Mr. Jerome B. Camina Business Manager Gentlemen : This refers to your letter dated 13 October 2010 requesting on behalf of the Ateneo de Davao University for tax exemption pursuant to Section 27 (D) (1) of the Tax Code of the Philippines, as amended. TcSaHC It is represented that Ateneo de Davao University with Taxpayer's Identification No. 001-921-709-000, is a non-stock, non-profit corporation duly organized under the laws of the Philippines; that it is registered with the Securities and Exchange Commission (SEC) under Registration No. 3647; that it is recognized by the government and permitted by the Commission on Higher Education (CHED); and that the purposes for which it was incorporated are the following, among others: To establish, open, and maintain a school, college, university or institution for elementary, secondary, collegiate and professional courses, technical and vocation training and such other courses as may from time to time to be determined by the Board of Trustees in pursuit of the objectives of the Catholic Church and the Society of Jesus. In support of its request, Ateneo de Davao University has completely submitted on 31 August 2011 the following documents: 1) Letter application for tax exemption; 2) Certified true copy of the Certificate of Registration with the SEC; 3) Certified true copy of the Articles of Incorporation which includes the following provisions: a. That the corporation is non-stock, non-profit; b. That the primary purpose for which it was created is one of those enumerated under Sec. 30 of the Tax Code of 1997, as amended; c. That no part of the net income shall inure to the benefit of any its members; d. That the trustees do not receive any compensation; and e. In case of dissolution, assets of the corporation shall be transferred to similar institution or to the government. 4) Certified true copy of the By-Laws; 5) Certified true copy of the Annual Information Return and Financial Statements for the last three (3) years of operation; 6) Certified true copy of the CHED recognition; 7) Sworn Affidavit of Non-Forum Shopping; 8) BIR Certificate of Registration. In reply, please be informed that under Department Order No. 149-95 dated November 24, 1995 amending Department Order No. 137-87, interest income from currency bank deposits and yield from deposit substitute instruments used actually, directly and exclusively in pursuance of its purpose as an educational institution, are exempt from the 20% final tax and 7 1/2% tax on interest income under the expanded foreign currency deposit system imposed under Section 27 (D) (1) of the Tax Code of 1997, subject to compliance with the conditions that as a tax-exempt educational institution it shall on an annual basis submit to the Revenue District Office concerned an annual information return and duly audited financial statement together with the following: (a) Certification from their depository banks as to the amount of interest income earned from passive investment not subject to the 20% final withholding tax and 7 1/2% tax on interest income under the expanded foreign currency deposit system imposed by Section 27 (D) (1) of the Tax Code of 1997; aDcHIC (b) Certification of actual utilization of the said income; and (c) Board Resolution by the school administration on proposed projects ( i.e. , construction and/or improvement of school buildings and facilities, acquisition of equipment, books and the like) to be funded out of the money deposited in banks or placed in money markets, on or before the 15th day of the fourth month following the end of its taxable year (Sec. 4, Finance Department Order No. 137-87). Under Section 235 of the Tax Code of 1997, as amended, any provision of existing general or special law to the contrary notwithstanding, the Revenue District Officer shall conduct an audit of annual information return filed, the books of accounts and other pertinent records of Ateneo de Davao University to determine compliance with the conditions set forth in the certificate of tax exemption and tax liabilities, if any. (BIR Ruling Nos. 115-10 dated November 4, 2010 and 141-10 dated December 7, 2010) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue